I don’t go anywhere without my sugar glider, including most of this week spent in Austin, TX with TMS. No, a sugar glider is not a risqué pet name for a body part, it is pretty much a flying possum. Okay, I don’t have a flying possum, but starting July 1 American Airlines is banning sugar gliders from being allowed onboard as service animals, along with goats, birds of prey, and hedgehogs. What is the world coming to when airports aren’t zoos?

Disaster Updates

The other night I knocked it out of the park when I came up with this gem during Scrabble: Pneumonoultramicroscopicsilicovolcanoconiosis. It is the longest word in the English language (46 letters). It means the lung disease caused by inhaling volcanic ash. Okay, I didn’t come up with that one, but it is a concern on the Big Island in Hawai’i.

Six time zones away, people should avoid the rush and by buying water and plywood now. The annual Hurricane Genesis and Outlook Project report predicts that there will be 11 to 18 named tropical storms this year; seven are projected to become hurricanes and three are expected to be major - “normal to above normal.”

Speaking of which, the Federal Housing Administration (FHA) announced that due to the extensive damage caused by Hurricane Maria in Puerto Rico and the U.S. Virgin Islands, the U.S. Department of Housing and Urban Development (HUD) has exercised its authority to extend foreclosure timelines through August 16, 2018, for Home Equity Conversion Mortgages (HECM) on impacted properties in those Presidentially-Declared Major Disaster Areas (PDMDAs). “This extension is applicable only to those counties declared eligible for Individual Assistance by the Federal Emergency Management Agency (FEMA).  It applies to both the initiation of foreclosures and foreclosures already in process on HECMs that become due and payable for reasons other than the death of the last surviving borrower and eligible non-borrowing spouse. This guidance is effective immediately and is applicable to all homeowners with FHA-insured HECM mortgages whose property or place of employment is in the PDMDAs for Puerto Rico’s Hurricane Maria (FEMA-DR-4339) and U.S. Virgin Islands’ Hurricane Maria (FEMA-DR-4340).

North Carolina’s Guilford and Rockingham County have been declared by FEMA as Major Disaster Areas for incident date of April 15th, 2018 impacted by tornado and severe storms. Click here to view FEMA's recent update on N.C.

Mortgage Solutions Financial posted a bulletin regarding the FEMA Disaster Alert for the Indiana Severe Storms and Flooding.

Capital Markets

Rates are trending higher, but that doesn’t mean every single piece of economic news is stronger than expected, nor will rates go up every day. The market is pricing in a near 100% probability of a 25-basis point increase in the fed funds target rate in June with a greater than 70% probability of another 25-basis point increase in September.

But recall that real gross domestic product (GDP) grew at an annual rate of 2.3 percent in the first quarter of 2018 compared to an increase of 2.9 percent in the fourth quarter of 2017. The quarter-over-quarter decline was due in part to consumer spending only increasing at a 1.1 percent annualize rate.

What about those tax cuts that were going to drive consumer spending? Keep in mind that an estimated 90 percent of wage earners did not see their take home pay increase until February when the US Treasury Department updated their tax withholding guidance. Additionally, last week saw consumer confidence reach its second highest level since 2000 and unemployment is not far from the 3.8 percent cycle low during the same time.  Though the labor participation rate is lower than it used to be, things continue to look good for further growth in consumer spending.

Durable goods orders received a boost from double digit growth in orders for civilian and military aircraft and rose to a better than expected monthly increase of 2.6 percent. Excluding the volatile transportation component, however, orders were flat in March. Another bright spot was a 12.3 percent increase in nonresidential fixed investment.  

And remember that new home sales blew through an expected 1.9 percent increase as they jumped 4.0 percent from the previous month. February’s data was revised upwards as well.  March’s annualized pace of 694,000 new home sales represents the fastest pace of the current expansion even though sales in the Northeast declined due to inclement weather.

Small business optimism ticked up in April after receding slightly in March; though if you recall, March followed a cycle high in February. Demand is strong, and firms can increase prices, which is good as competition for quality workers and wage pressure increase.  According to the survey, 88 percent of firms hiring or trying to hire saw few or zero qualified applicants for the positions they were attempting to fill. The survey data showed worker compensation at the highest level since 2000, however as we have seen, that has not translated into significantly higher wage data on the official government labor reports.

Speaking of inflation, both the CPI and PPI were subdued in April, rising 0.2 percent and 0.1 percent respectively.  While there are certainly inflation pressures mounting, until they begin to flow through to official sources of data, the current narrative of orderly interest rate increases throughout the remainder of the year remains unchanged. Headline CPI increased 0.2 percent in April and was up 2.5 percent for the previous twelve months, however recent gains in crude prices on the heels of a re-imposition of sanction on Iran will put more pressure on the energy component in May. According to the AAA, the national average for a gallon of regular gasoline is up to $2.87, nearly 23 percent higher than a year ago. As gas prices increase and absorb consumer spending, pressure starts to mount for discretionary items such as restaurants and hotels.

Increases in the Producer Price Index for Final Demand cooled somewhat after strong gains at the end of 2017 and first quarter of this year. The PPI increased only 0.1 percent in April and is up 2.6 percent for the previous twelve months.

Yes, the trend in rates is higher – there’s not much to suggest they’ll go down in dramatic fashion any time soon – and we saw more of that Wednesday. The question has now turned to whether higher Treasury yields indicate that the Federal Reserve will be forced accelerate monetary tightening. Treasury yields act as a benchmark for global borrowing costs, so yesterday’s selling in Italian BTPs led to worries that a bigger flight to safety could develop. This was in response to the governing plan being presented by Italy's Lega and Movimento 5 Stelle, in which the parties expect debt forgiveness from the ECB. It’s a global marketplace!

As far as economic releases went, Industrial production increasing for a third straight month was fueled by increased output across all three major industry groups. Housing starts declined 3.7% month-over-month in April while permits fell 1.8%. Nothing in the report suggested prospective homeowners can expect supply-driven price relief soon.

This morning we’ll have weekly jobless claims and the Philly Fed at 8:30am ET. The Philadelphia Fed Manufacturing Survey for May is due out shortly thereafter, as is April leading indicators. We also have two scheduled Fed speakers with Minneapolis' Kashkari and Dallas Fed President Kaplan. It’s early but rates are a shade better than Wednesday night with the 10-year yielding 3.09% and agency MBS prices better a couple ticks…

Lender Products and Training

First Look Appraisals, a national appraisal management company, appointed three accomplished executives to its Board of Directors.  Steve Haslam, former CEO of StreetLinks National Appraisal Services, Tony Ebeyer, StreetLinks former Chief Strategy Officer and Brad Morehead, former CEO of Livewatch Security, whom will actively advise and assist with the strategic development and direction of the company. First Look’s CEO, Craig Culbert, states, “First Look has assembled a leadership team of seasoned lending, appraisal, and AMC executives to build new processes and technology that overcome common frustrations between lenders and other AMCs. Simply stated, our leadership team knows the problems well because we have lived them from the lender and appraiser perspective; now, we’ve created the solution.” For more information about First Look Appraisals visit www.firstlookappraisals.com.

Did you know that LinkedIn has reached over 500 million members, making it one of the most popular social networks for professionals and one of the top social networks overall? But are you using LinkedIn to its fullest potential? This is a platform that often gets underutilized or put on the back burner when you get busy. But the truth is, LinkedIn can be an extremely powerful tool for you. That’s why on Thursday, May 24th from 10-11 AM PST/1-2 PM EST, Sierra Pacific Mortgage is starting a series on using this tool. It’s a free, fun, and informative 3-part webinar series entitled “LinkedIn”. You’ll learn how to optimize your profile, be engaging, and prospect quickly! Click here to register.

Military Direct Mortgage deploys the VA Rehab Loan, offering 100% financing of purchase price plus improvements, no monthly MI, and one closing for purchase and rehabilitation. The VA Rehab loan is available for purchase and refinance. Military Direct Mortgage is a VA Approved lender dedicated to serving Veterans and Active Military. “Our Veteran community deserves a mortgage that allows them to finance renovations they want in a new home, ensuring that they live comfortably after they have served our country.” For more information please visit MilitaryDirectMortgage.com.

GSF Mortgage Corporation has officially launched its Single Close Construction Correspondent Channel. GSF offers an end-to-end solution for your LO’s construction financing needs. FHA, VA, USDA and Conventional products available.  For further information, please contact Chad Jampedro.

Lending to a self-employed borrower—as any loan officer knows—is no simple task because you validate income based on tax returns—versus a W2. But the number of self-employed Americans is growing, and that means lenders will see higher application volume from nontraditional wage earners. To help lenders better accommodate this group, Freddie Mac is working with fintech company LoanBeam, whose highly refined optical character recognition (OCR) technology extracts and ingests data from a borrower’s tax returns at a 99.7% accuracy rate. Its software then calculates an income total and encapsulates the data into a workbook that can be customized to meet lender and GSE requirements. Freddie Mac is integrating LoanBeam’s technology with Loan Product Advisor®, Freddie Mac’s automated underwriting system. To learn more, visit freddiemac.com/loanbeam

Employment, Business Opportunities, and Promotions

Academy Mortgage’s originators earned the highest number of #1 state rankings (27 total) in Ask A Lender’s 2018 “Meet the Best” rankings (as published in Scotsman Guide). Academy is looking for highly motivated loan originators, sales managers, and branch managers nationwide who are eager to grow their referral base and purchase business. Thanks to 30 years of prudent financial management, a strong commitment to purchase business, industry-leading marketing and operational support, a unique company culture, and a clearly defined vision, Academy is thriving and is well-positioned for long-term growth. To find out more about Academy, interested candidates are invited to attend the company’s exclusive Mastermind 2018 networking event at The Palms Hardwood Suite in Las Vegas on Thursday, June 7, from 6–9 p.m., or they may contact National Recruiting Manager John Owens.

Incenter LLC will be marketing the sale of a residential mortgage company shell. The sale will include FN/FH/GN agency tickets as well as over 20 state registrations. This will not include any production or any mortgage servicing rights assets. Anyone interested can contact Hal Hermelee for more details.

Altisource is pleased to announce that Steve Greenfield, CMB has joined the Vendorly leadership team as Director of Operations responsible for overseeing day-to-day operations and continuing to evangelize the importance of Third Party Risk Management (TPRM).

Jerry Giovaniello, long-time senior vice president and chief lobbyist (37 years!) at the National Association of Realtors will retire at the end of this year. “Giovaniello joined NAR in 1981 from Capitol Hill, where he was chief of staff for two members of Congress from California. He was named NAR’s chief lobbyist in 2001, and…has developed long-standing relationships with legislators on both sides of the aisle and a reputation for ensuring Realtors®’ voices are heard on important policy issues.”

Sunwest Bank is pleased to welcome Shailesh Bhaid as chief information officer to oversee and drive the bank's application support and IT infrastructure teams and develop the bank's multiple new technology initiatives, many of which focus on greater workflow automation.